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Interest rates on consumer loans and mortgages in Cyprus increased in July, according to the Central Bank of Cyprus (CBC). The rate for consumer credit climbed to 6.67% from 6.18% in June, while the rate for home loans rose to 4.59% from 4.52%.
The CBC's latest report shows a mixed bag for financial products. On the one hand, borrowing costs have gone up; on the other, deposit interest rates have dropped. For households, the interest rate on short-term deposits (those maturing in up to one year) fell to 1.96%, down from 2.17% in June. Similarly, deposit rates for businesses dropped to 2.28% from 2.35%.
In the lending sector, the increased rates reflect higher costs for both individuals and businesses. For instance, interest on consumer loans, used for personal expenses or purchases, is now higher, and mortgage rates for buying homes have also gone up. Additionally, rates for loans to businesses have also seen a rise, with smaller business loans increasing to 5.57% and larger loans going up to 5.64%.
Despite these higher rates, new borrowing has surged. Total new loans hit €595.3 million in July, up from €514.9 million in June. Specifically, new consumer loans increased to €28 million, and loans for house purchases rose to €134.3 million. However, loans to smaller businesses fell slightly, while loans to larger businesses grew significantly.
Overall, while borrowing costs are rising, there is a notable increase in new loans across various sectors, indicating ongoing demand for credit despite the higher rates.
[With information from CNA]
